How Much Money Do You Need To Retire?

[Pages:43]How Much Money Do You Need To Retire?

A NARFE Federal Benefits Institute Webinar

Presented by Mark Keen, CFP

This webinar provides general information only.

For individual assistance, NARFE recommends you contact a financial planner who has a stated fiduciary responsibility to act solely in your interest.

National Active and Retired Federal Employees Association Sponsored by

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How Much Money Do You Need To Retire?

A NARFE Federal Benefits Institute Webinar

Presented by Mark Keen, CFP

National Active and Retired Federal Employees Association Sponsored by

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Framing the Conversation

Retiree Risks

Sequence Risk

62

Early

75

Retirement

National Active and Retired Federal Employees Association Sponsored by

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Sequence of Returns

Accumulation

Distribution

Portfolio A

Portfolio B

Portfolio A

Portfolio B

Annual Year-end Annual Year-end

Annual Year-end Annual Year-end

Age Return

Value

Return Value

Age Return

Value

Return

Value

$ 100,000

$ 100,000

$ 691,527

$ 691,527

41

29% $ 129,000 -12% $ 88,000 66

29% $ 847,467 -12% $ 578,117

42

18% $ 152,220 -21% $ 69,520 67

18% $ 957,987 -21% $ 428,578

43

25% $ 190,275 -14% $ 59,787 68

25% $ 1,151,631 -14% $ 337,030

44

-6% $ 178,859 22% $ 72,940 69

-6% $ 1,047,018 22% $ 365,082

45

15% $ 205,687 10% $ 80,234 70

15% $ 1,159,317 10% $ 358,783

46

8% $ 222,142 4% $ 83,444 71

8% $ 1,208,772 4% $ 331,447

47

27% $ 282,121 11% $ 92,623 72

27% $ 1,482,707 11% $ 322,079

48

-2% $ 276,478 3% $ 95,401 73

-2% $ 1,411,379 3% $ 287,941

49

15% $ 317,950 -3% $ 92,539 74

15% $ 1,572,715 -3% $ 236,816

50

19% $ 378,360 21% $ 111,973 75

19% $ 1,817,845 21% $ 231,960

51

33% $ 503,219 17% $ 131,008 76

33% $ 2,355,932 17% $ 217,025

52

11% $ 558,574 5% $ 137,558 77

11% $ 2,561,958 5% $ 177,622

53

-10% $ 502,716 -10% $ 123,802 78

-10% $ 2,261,394 -10% $ 115,492

54

5% $ 527,852 11% $ 137,421 79

5% $ 2,321,149 11% $ 71,834

55

17% $ 617,587 33% $ 182,769 80

17% $ 2,654,553 33% $ 25,980

56

21% $ 747,280 19% $ 217,496 81

21% $ 3,146,828 19% $

-

57

-3% $ 724,862 15% $ 250,120 82

-3% $ 2,998,603 15% $

-

58

3% $ 746,608 -2% $ 245,118 83

3% $ 3,029,697 -2% $

-

59

11% $ 828,734 27% $ 311,299 84

11% $ 3,297,624 27% $

-

60

4% $ 861,884 8% $ 336,203 85

4% $ 3,366,474 8% $

-

61

10% $ 948,072 15% $ 386,634 86

10% $ 3,634,428 15% $

-

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22% $ 1,156,648 -6% $ 363,436 87

22% $ 4,355,529 -6% $

-

63

-14% $ 994,717 25% $ 454,295 88

-14% $ 3,688,778 25% $

-

64

-21% $ 785,827 18% $ 536,068 89

-21% $ 2,860,226 18% $

-

65

-12% $ 691,527 29% $ 691,527 90

-12% $ 2,455,146 29% $

-

Average 8%

8%

8%

8%

Accumulation: Both Portfolio A and B start with $100,000 and take no withdrawals. Portfolio A experienced strong performance in early years and poor performance later. Portfolio B experienced the exact same returns, but in reverse order. Sequence of returns doesn't matter with you're accumulating assets.

Distribution: Both Portfolio A and B start with a $691,527 next egg. Both withdrew 5% of the first year value and adjusted their withdrawals for 3% inflation each following year. Sequence of returns matters a great deal during distribution years

This example is hypothetical. It is designed for illustrative purposes only and does not represent any actual investment.

National Active and Retired Federal Employees Association Sponsored by

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Framing the Conversation

Retiree Risks

Sequence Risk

Inflation Risk

62

Early

75

Mid

85

Retirement

Retirement

National Active and Retired Federal Employees Association Sponsored by

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Inflation

Inlfation Rate

Rolling 30-Year Inflation Averages

6.00% 5.00% 4.00% 3.00% 2.00% 1.00% 0.00%

30-Year Period Ending The Inflation rate is calculated using the current Consumer Price Index (CPI-U) published monthly by the Bureau of Labor Statistics.

5.44% 3.52% 0.79%

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Inflation

$250,000

$48,000 Adjusted for Inflation Over a 30-Year Retirement

$200,000

$150,000

$100,000

$50,000

$62 63 64 65 66 67 68 69 70 71 72 73 74 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92

Min

Average

Max

The Inflation rate is calculated using the current Consumer Price Index (CPI-U) published monthly by the Bureau of Labor Statistics.

National Active and Retired Federal Employees Association Sponsored by

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Framing the Conversation

Retiree Risks

Sequence Risk

Inflation Risk

Longevity Risk

62

Early

75

Mid

85

Late

95

Retirement

Retirement

Retirement

National Active and Retired Federal Employees Association Sponsored by

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